Global reinsurance giant Swiss Re generated a return on equity (ROE) of 25.9% for the first nine months of 2023, with lower catastrophe losses and higher rates resulting in significant improvement performance this year.
Swiss Re grew its business in a more challenging reinsurance market environment, with premiums earned in the property and casualty business increasing by 5.4% year-to-date.
Across its businesses, Swiss Re has reported strong profits for the year so far, with its property and casualty reinsurance (P&C Re) business generating net profit of US$1.5 billion with a combined ratio of 94.3, with its life and health reinsurance business (L&H Re) with a net profit of US$634 million and its Corporate Solutions unit achieving a net profit of US$492 million with a combined ratio of 91.3%. .
In the third quarter alone, Swiss Re achieved a group net profit of $1 billion, while for the nine months the figure was $2.5 billion, on track for the $3 billion target. dollars for the entire year.
Christian Mumenthaler, CEO of Swiss Re Group, said: “Swiss Re’s performance in the first nine months of 2023 is the result of our continued focus on underwriting quality. This has enabled us to navigate a heightened risk environment that continues to be characterized by significant loss events for the insurance industry.
John Dacey, Swiss Re Group Chief Financial Officer, added: “As interest rates continue to rise, we are seeing improvements in recurring revenue yield and our overall investment results. Combined with improved underwriting performance, this has significantly strengthened the Group’s earnings power.
A year ago, for the first nine months of 2022, Swiss Re reported a net loss of US$285 million and an ROE of –2.1%.
The significantly improved performance will also flow through to investors in Swiss Re’s range of third-party capital structures, from its Sector Re and other sidecar arrangements, to its ILS fund Swiss Re Insurance-Linked Investment Management Ltd ( SRILIM) which allows investors to participate in the execution of its disaster book.
In property and casualty reinsurance, Swiss Re reported net profit of $1.5 billion, driven by underwriting performance, renewals and investment income.
P&C Re’s combined ratio was 93.7% in the third quarter and 94.3% for the first nine months, despite what Swiss Re called a “substantial level of industry-significant natural catastrophe losses.” A year ago, the nine months of 2022 saw an underwriting loss, with a CR of 106.1%.
Swiss Re also absorbed more changes in claims reserves, with a negative change of $151 million compared to the previous year, reflecting significant increases in liability reserves in the United States. It’s certainly a priority for analysts today, but continued strong results across the industry should help somewhat overshadow the need to bolster U.S. claims reserves.
Swiss Re reported significant natural catastrophe claims amounting to US$1.1 billion for the first nine months, a considerable drop from US$2.5 billion in previous years.
Interestingly, the reinsurance company said the nine-month total catastrophe losses were net of reinstatement premiums of $52 million, which could suggest that Swiss Re had recovered something in reinsurance or retrocession during the period and that it should reinstate it.
Of the total catastrophe losses, US$421 million came from the third quarter, mainly due to severe weather events in Europe, wildfires on the Hawaiian island of Maui and the earthquake in Morocco.
Christian Mumenthaler, CEO of the group, further explained: “In light of the good performance recorded since the beginning of the year, we maintain our objectives for the whole year, in particular a Group net profit above 3 billions of dollars. We continue to focus on our disciplined underwriting strategy which provides a solid foundation for the future.